Are you compliant with the tenant fee ban?
This section covers the tenant fee ban regulation to help landlords make sure they are compliant
The Tenant Fees Act (2019) came into force for new or renewed tenancies on 1 June 2019, preventing landlords and letting agents in England from charging certain letting fees to tenants. That was extended to all tenancies from 1 June 2020.
As a result of the fee ban, when signing a new tenancy agreement, tenants are only required to pay a holding deposit – which is refundable in most cases – their rent and any security deposit.
The only additional charges that can be made are ‘permitted’ fees, such council tax, utility costs, TV licences plus charges for replacing lost keys and late payment of rent (which is limited to interest charges at three per cent above bank base rate).
Under the Act, a cap has also been set on the amount that can be taken as a security or holding deposit. Landlords or agents found in breach of the Tenant Fees Act by charging a ‘prohibited payment’ could be fined £5,000 for a first offence and risk an unlimited fine if they break the rules again within five years.
Also, no Section 21 notice can be served until the prohibited payment has been refunded to the tenants, and tenants can apply for a refund to the First Tier Tribunal.
Letting fees are also banned in Scotland and Wales. More detailed guidance is available at mydeposits.co.uk.
In Northern Ireland, letting agents cannot charge tenants for work that’s done to benefit the landlord when setting up or renewing a tenancy, including fees for credit checks, guarantor checks and deposit administration. However, there is no law covering fees that might be charged directly by a landlord.
Under the Tenant Fees Act, landlords and agents must comply with the following caps on tenant deposits:
No more than five weeks’ rent where the total annual rent is less than £50,000
No more than six weeks’ rent where the total annual rent is £50,000 or more
No more than one week’s rent in respect of a refundable holding deposit to reserve a property
It is important to note that the cap does not apply to on-going tenancy agreements signed before 1 June 2019, so there’s no need to return tenants’ deposits where this is the case.
Read our ‘Ultimate guide to deposit protection legislation’ for more information.
Since 2007, landlords have been legally obliged to protect tenancy deposits in a government-approved deposit protection scheme.
There are three schemes that landlords in England and Wales can use to protect their tenant’s deposit, offering two options:Transfer the deposit monies to the scheme (custodial)
Keep hold of the deposit monies and take out insurance with the scheme (insured)
HFIS is the parent company of mydeposits, which provides simple deposit protection for landlords, letting agents and tenants.
As well as making sure the deposit is kept secure during the tenancy, these schemes also arbitrate over any disputes between tenants and landlords.
So, if you want to retain any of the deposit monies at the end of the tenancy to cover the cost of things like damage, cleaning or rent arrears, the scheme will decide what is a reasonable deduction.
For more detailed information, take a look at our tenancy deposit protection guidance or visit mydeposits.
Different scheme providers operate in Scotland and Northern Ireland.
When you protect your tenant’s deposit in a scheme, you are obliged to provide them with ‘prescribed information’, which falls into two categories:
Information about the scheme. Every scheme provides a leaflet to landlords to pass on to their tenants.
Information about the tenancy. This includes contact details for both parties and the circumstances under which all or part of the deposit may be retained by the landlord.
If you fail to give the tenant this prescribed information, they can sue you for a penalty of up to three times the deposit amount and you will not be able to serve a valid Section 21 notice until after the prescribed information has been provided.
In recent years, a number of ‘deposit replacement’ products have entered the market, offering tenants an alternative to paying a deposit to their landlord in the traditional way.
These can be very good, but landlords need to be careful as these schemes are not ‘insurance’ but a guarantee. So, you need to be sure that the scheme company will be good to make any payments due to you when your tenancy ends (which in some cases may be many years hence).
You should also check out what fees are charged. For example, unlike the government-approved tenancy deposit schemes, the adjudication service is not normally free.
Before beginning or renewing a tenancy, all landlords who let properties in England are legally required to provide tenants with a copy of the Government’s ‘How to rent’ guide.
The guide was created to help tenants and landlords in the private rented sector understand their rights and responsibilities and includes key information on:
What to look out for before renting
Living in a rented home
The process at the end of the tenancy
What to do if something goes wrong
The guide is updated frequently so, to make sure you’re always giving tenants the most recent version, it’s best not to download and save the guide, but to always access it directly from the GOV.UK. At the time of writing (February 2024) the last update was published on 2 October 2023.
This is particularly important in the event that you need to serve a Section 21 notice for a ‘no fault’ eviction, as any notice served before the correct version of the guide is provided to the tenant will be void and unenforceable.
